05 Oct

TDS deducted do I have to file an income tax return

TDS deducted, do I have to file an income tax return?

Since my TDS is being deducted, there is no need to file an income tax return - a common misconception.

Nowadays, the income tax department has been sending instructions, letters, emails to the taxpayers for the last two years not to file income tax returns based on TDS and other details.

The Income-tax department sends notices to the taxpayers on the basis of information attached to the PAN, such as TDS on banks on FDR, mutual fund transactions, immovable property transactions, cash transactions in savings accounts, credit card transactions, etc. Many taxpayers feel they do not need to file an income tax return because their TDS or tax is being deducted on the income they have already earned. This is a big misconception for beginners, for the common man, for new entrepreneurs. If the taxpayer has taxable income in any year or has a return to claim, he is required to file an income tax return. Further, if notice is received even after filing the return, it should be complied with. The next limit of TDS deduction and the basic exemption limit of taxable income, are both different. So even if the income is less than the taxable income, the TDS is deducted by the payment and the above misconceptions start. The perception of the next salaried person is the same, as they feel that TDS is deducted on their total salary, so all taxes are paid, no need to file a return etc.

·        Relationship between income tax and TDS

Tax is deducted from the TDS source. According to the Income-tax Act, in certain specified transactions like salary, rent, interest, commission, fees, etc., when paying or calculating expenses, whichever is earlier, TDS must be deducted and paid into the government coffers. This means the payer pays the recipient's tax. E.g. “A” is an employee of “B” and his monthly salary is Rs.60000 then  "B" will have to deduct TDS from "A" salary and will pay the TDS to the government  I.e. TDS depends on the type of transaction. But the recipient is responsible for filing the income tax return. The recipient taxpayer has to show all the income received in the financial year like salary, rent, interest, consultancy fee, contract fee etc. in the income tax return. After considering all the income, deductions etc. and after-tax calculation, if it is the income tax payable, it should be paid or it should be mentioned in the return if it arises. The details of the TDS credit received in the income tax return have to be mentioned by the taxpayer. That is, reconciliation of TDS and filing of income tax return is required as per Form 26AS. Any discrepancies may result in further notice to the taxpayer.

·        Should I file an income tax return?

If a person has taxable income, he/she is required to file an income tax return i.e. his / her income exceeds the basic exemption limit whether the tax liability has arisen or not. If a person's TDS is deducted and refunded, it can be claimed by filing an income tax return. E.g. Many taxpayers earn income only from interest on deposits. If the interest received does not exceed the basic exemption limit, it is not necessary to file an income tax return. But if TDS is deducted on interest, he will have to file an income tax return to get a refund. To protect themselves from TDS deduction, such taxpayers may file Form 15G or 15H before receiving income for non-deduction of TDS.

·        What precautions should I take before filing an income tax return?

Every taxpayer should download 26AS from the Income Tax Department website. Income and TDS as per 26AS should be verified with income tax returns. The taxpayer may have to face a lower income department than the income shown in 26AS.

·        What to do if the income tax payer gets notice for non-filing of income tax return?

If the taxpayer receives a notice for non-filing of income tax return this year and wants to state his status, he will have to comply online. The taxpayer has to state whether he has filed an income tax return, if he has filed it, he has to mention the date of filing the return, receipt number, board/ward and online or paper form. If the return is not filed, a reason for non-filing must be given. Next, he has to mention whether the instruction he received is for his own pan or for another related pan. Based on this notice, the taxpayer can file the return for the previous year. If tax is to be paid, the taxpayer will have to pay tax and interest, file a return and then submit the compliance online.

·        What should I learn from income tax returns, TDS and notices?

The deduction of TDS is the responsibility of the deductor, filing of income tax return is his own and issuance of notice is the responsibility of the department. If a taxpayer files an income tax return properly, the department will not issue a notice and no online compliance will be required. Many taxpayers feel that there is no need to file an income tax return after deducting TDS. A little confusion/misunderstanding in terms of the law becomes complicated in the future. If you do not pay attention to minor ailments, your health may deteriorate. This means obeying the law and the body's illness must be cured immediately otherwise its consequences can lead to complications in the future.

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